On Monday, DA Davidson adjusted its price target for Heartland BancCorp (OTC:HLAN) shares, a high-growth Ohio bank, reducing it to $103 from the previous $105. The firm has maintained a Buy rating on the bank's shares.
The revision follows Heartland BancCorp's strategic decisions leading to a decrease in loans by 4.9% quarter over quarter and a 3.4% drop in deposits as measures to safeguard profitability and net interest margin (NIM). Despite these declines, the bank's credit quality remains robust, with nonperforming assets (NPAs) to loans ratio at 13 basis points and net charge-offs (NCOs) at just one basis point.
The bank's pre-provision net revenue (PPNR) fell short of consensus expectations due to weaker net interest income (NII), which was not fully compensated by stronger fees and operational expenditures. Consequently, DA Davidson has revised its earnings per share (EPS) estimates downward based on the weaker NII.
Nevertheless, the analyst firm continues to project that Heartland BancCorp will maintain a PPNR return on average assets (ROAA) of approximately 1.4% and a normalized return on average tangible common equity (ROATCE) around 13%.
Heartland BancCorp's current trading position is at a discount when considering its PPNR and tangible book value (TBV) relative to the premium its return profile warrants. Despite the temporary strategic shift and the recent adjustments in financial metrics, DA Davidson reaffirms its Buy rating, signaling confidence in the bank's long-term performance and growth prospects.
InvestingPro Insights
As Heartland BancCorp navigates through strategic shifts, the latest data from InvestingPro provides a detailed snapshot of the bank's financial health. With a market capitalization of $177.33 million, the bank's P/E ratio stands at a modest 8.85, reflecting a valuation that could appeal to value investors. The adjusted P/E ratio for the last twelve months as of Q1 2024 is closely aligned at 8.8, indicating consistency in earnings valuation over time.
InvestingPro Tips suggest that investors should consider the PEG ratio of 0.95, which points to a near alignment between the company's price valuation and its expected earnings growth, potentially signaling a balanced investment opportunity. Furthermore, the dividend yield of 3.45% as of the last dividend's ex-date on March 22, 2024, is an attractive feature for income-focused investors, especially in the context of the bank's solid credit quality and the analyst firm's long-term confidence.
For those looking to delve deeper into Heartland BancCorp's investment potential, InvestingPro offers additional insights, with a total of 5 more InvestingPro Tips available for subscribers. To access these tips and enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This exclusive offer provides a more comprehensive understanding of Heartland BancCorp's financials and market position, aiding investors in making informed decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.